As the 2024 calendar year comes to a close, private companies in Ontario must prepare for the end of their financial, or fiscal, year. A company's fiscal year is often tied to its incorporation date and, under the Ontario Business Corporations Act ("OBCA") or Canada Business Corporations Act ("CBCA"), must not exceed 15 months from incorporation. Once established, the fiscal year-end typically remains consistent unless formally changed through a resolution.
In addition to corporate income tax (T2) filings with the CRA, companies face legal obligations such as preparing and filing maintenance documents. These documents are critical for maintaining regulatory compliance and ensuring the corporation's minute book is current.
What Are the Required Maintenance Documents?
The below maintenance documents are important to ensure compliance with minimum corporate law requirements under the OBCA and CBCA, and reflect a company's activities during the fiscal year. These include:
- Annual Returns: Private corporations registered under the OBCA must file annual returns with the Ministry of Public and Business Service Delivery within six months of their fiscal year-end. Newly incorporated companies must file an initial return within 60 days of incorporation. Federal corporations under the CBCA must file annual returns (together with information on individuals with significant control) within 60 days of their registration anniversary. These filings generally require information such as the corporation's name, official email address, registered address, officers and directors (including names and addresses), and, for CBCA corporations, whether the entity is distributing (sells shares to the public) or non-distributing.
- Annual Resolutions: Private companies must hold annual meetings or adopt unanimous written resolutions at least once a year. For new corporations, the first meeting must occur within 18 months of incorporation, with subsequent meetings no more than 15 months apart. The process begins with directors passing resolutions to approve financial statements, appoint officers, where applicable, declare/approve dividend, address other corporate matters and request that shareholders transact the corporation's annual business. Shareholders then pass resolutions to: elect directors for the upcoming year, appoint auditors (or approve audit exemptions, if applicable); and acknowledge receipt of the financial statements for the past fiscal year. These resolutions, whether achieved through meetings or written consent, are documented as part of the corporation's minute book to keep it up to date.
- Notices of Change: Under the Corporations Information Act ("CIA"), Ontario corporations must file a Notice of Change with the Ministry within 15 days of any updates to information previously filed, such as changes to the corporation's registered address, officers, directors, or official email address among others. Resolutions documenting these changes, along with supporting documents, should also be recorded in the corporation's minute book to keep it up to date. Federally incorporated companies under the CBCA are similarly required to file updates with Corporations Canada within the same timeframe.
- Beneficial Ownership Register: Private companies must maintain a transparency register of individuals with significant control ("ISC"), unless exempted (e.g. wholly owned subsidiaries of publicly traded companies). An ISC is someone who, individually or jointly, holds at least 25% of the voting rights or shares (by fair market value) of a corporation, or has significant influence that results in the effective control of a corporation. The register must include prescribed details, such as the ISC's name, address, date of birth, the date they became or ceased to be an ISC, and the nature and extent of their control. Under the CBCA, federally incorporated companies must update this register annually and within 15 days of changes and file ISC information with Corporations Canada. OBCA corporations, by contrast, are required to keep their register current annually at their registered offices but are not subject to federal filing requirements.
Consequences of Non-Compliance
Failing to prepare or file maintenance documents can lead to significant legal and financial consequences, as follows:
- Non-compliance may lead the Ministry or Corporations Canada to dissolve the corporation, resulting in a loss of registration.
- Non-compliant companies may be prohibited from initiating legal proceedings until their filings are up to date.
- Failure to properly maintain annual maintenance documents may result in adverse findings during Canada Revenue Agency (CRA) audits. These may have grave financial repercussions for companies.
- A non-compliant corporation may be unable to obtain a Certificate of Status or good standing, often required for transactions such as financing or asset sales/acquisitions.
- Corporations and every director or officer of the corporation may be liable under applicable laws to fines and, where applicable, imprisonment for various contraventions. In addition, shareholders could incur fines and/or imprisonment for providing false or failing to provide required ISC information to the corporation.
Conclusion
For private companies operating in Ontario, post year-end housekeeping or filings involves more than just corporate income tax filings. Ensuring compliance with the corporation's ongoing maintenance obligations is essential for preserving corporate status, avoiding penalties, and maintaining smooth operations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
